It is not uncommon for businesses to want to avoid the significant costs that can be associated with litigation to resolve business disputes. For this reason, companies are now working to ensure that business disputes are resolved through alternative dispute resolution (ADR) methods in place of litigation efforts.
The two most common forms of ADR are arbitration and mediation. While both processes can frequently provide a much cheaper method of resolving disputes, they involve remarkably different tactics.
Leiva Law Firm represents business owners all over Southern California. Call 818-703-1777 to schedule a free consultation.
Mediation vs. Arbitration
People who are weighing mediation against arbitration need to consider many essential factors when determining the best form of ADR to use for their situation. Both mediation and arbitration can help save money compared to litigation, but mediation is typically less expensive and less time-consuming than arbitration.
Remember, mediation involves a neutral third party working with both sides to try and find creative solutions to their disputes. A mediator doesn’t make decisions but instead encourages cooperation in arriving at an agreement.
In arbitration, a third party arbitrator is used and agreed to by both sides. The arbitrator effectively acts as a judge, and arbitration unfolds like a traditional trial. As a result, arbitration may play out for much longer than mediation.
An arbitrator’s decision may be legally binding. Arbitration can be preferable for businesses that feel that they have the stronger legal arguments in their disputes and are more concerned with getting things done their way rather than forging a collaborative agreement.
Arbitration is the far more adversarial of the two processes. Mediation is generally preferable when the disagreements between the two parties are more minimal.
A mediator cannot force the parties to agree to a resolution. If the two sides are unable to come to an agreement through mediation, they may proceed to litigation.
ADR may be worked into certain business contracts as a preferred method of dispute resolution. In such cases, litigation may be allowed only after ADR fails.
Another type of ADR that may be used in some cases are settlement conferences. In a settlement conference, the two sides meet without any third party (and possibly without their attorneys) to try and hammer out agreements.
ADR in California allows for cost-effective and fair resolution of many civil cases. The California Legislature declared in California Business & Professions Code § 465(b) that ADR methods should be encouraged by state courts.
Find a Business Litigation Lawyer in California
If you are considering arbitration or mediation to resolve a business dispute in Southern California, quickly seek legal representation is in your best interest. The Leiva Law Firm helps clients in communities in and around Los Angeles.
Marlene Leiva has over a quarter-century of legal experience. She can provide a complete evaluation of your case when you call 818-519-4465 or contact us online to schedule a free consultation.